Option Trading Call : Infosys

INFOSYS :

For May 2018 Expiry

Buy 1200 CALL OPTION at Rs.23.50

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ENGINEERS INDIA : Short To Mid Term View For Investors & Traders

ENGINEERS INDIA :

CMP : 152.50

View: Exit/avoid investments, buy put calls, sell futures

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As you can see in the chart, the monthly chart is not looking very good, the price to earnings ratio is also high around 25 for a public sector company which is not guzzling cash or in more or less infrastructure related businesses. Now election coming up next, such PSUs with macro businesses are going to get discounted little by little.

There is support around 145 levels, from which it might bounce back. But we believe ultimately it may go and test the major moving averages which are way down from current levels. And any correction in broader markets or sideways consolidating markets with dampened investor mood can also make it slide slowly to those levels.

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CEAT LTD : Short Term Trading View And Some Words On Tyre Stocks

CEAT LTD: cmp 1611

The tyre stocks had been in an upswing before the recent Trump Tariff Tantrum correction set off in markets. However after about couple of months in that, it looks like we are all set to see new buying and upmoves in selected sectors again. One of them seems to be tyre stocks.

They have got the push to get out of the correction or consolidation by the falling rubber prices, the decision of Indian government to levy import duty on rubber and the huge brand value and investor favouritism created in tyre company such as MRF.

CEAT has been lagging in picking up with its other peers like Apollo Tyre and MRF which are almost now making new highs. CEAT, which also once played on the tunes of the sectoral theme with its peers has been slow in responding the rise in the peer group stocks and still down about 20% from its highs. One of the reason may be the not so exciting results in the previous quarter.

However, it looks like it is consolidating and likely to give good spurt on the upside with first target of 1700 and then reach its old highs of 2000.

We do not look tyre stocks as commodity business such as sugar, and all metals. Why? Because they have not behaved in that fashion. They have more behaved like a consumer and brand businesses. So, the point is for the medium and long term investors also this stocks are not a threat. History has good evidence of our argument.

A delivery trader can buy in spot, or try to trade with call options for april, or may or keep an eye to take a good entry price and gain on an almost sureshot move on the upside.

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Possible Vulnerability To Indian Exports By Trump Tarriff Tantrums. USA Sues In WTO

 Indian exports up to $5.6 billion could be hit as the US pressures India for greater market access by declaring a review of the generalized system of preferences (GSP) through which Indian exporters get preferential market access to the US.

The GSP programme allows duty-free entry of 3,500 products from India, which benefits exporters of textiles, engineering, gems and jewellery and chemical products. The total US imports under GSP in 2017 was $21.2 billion, of which India was the biggest beneficiary with $5.6 billion, followed by Thailand ($4.2 billion) and Brazil ($2.5 billion).

The Trump administration has been accusing India of unfair trade practices and has challenged most of its export subsidies at the World Trade Organization (WTO). It has also not granted India an exemption on unilateral hike in steel and aluminium tariffs, unlike to its other strategic allies. On Friday, the US treasury department added India to the currency practices watch list saying New Delhi increased its purchase of foreign exchange by $56 billion in 2017 which does not appear necessary given its already robust foreign exchange reserves.

The US Trade Representative (USTR) on Friday announced that it is reviewing the GSP eligibility of India, along with Indonesia and Kazakhstan, based on concerns about the countries’ compliance with the programme.

For India, the GSP country eligibility review is based on concerns by the US dairy industry and medical device industry alleging Indian trade barriers affecting US exports in those sectors. India has very high import duties on dairy products to protect its domestic industry. It has also recently put price controls on medical devices like cardiovascular stents, drawing ire from big US pharma companies.

“India has implemented a wide array of trade barriers that create serious negative effects on US commerce. The acceptance of these petitions and the GSP self-initiated review will result in one overall review of India’s compliance with the GSP market access criterion,” USTR said.

A commerce ministry official speaking under condition of anonymity said though India is worried about the move, it hopes a majority of US industries which get cheaper intermediate products from India due to GSP benefits will support continuation of the programme. “We hope it won’t be easy to withdraw GSP benefits to India,” he added.

Abhijit Das, head of the Centre for WTO Studies at the Indian Institute of Foreign Trade, said given Trump’s tendency to take unilateral action, there could be threat to India’s continuous access to GSP. Das said India should be ready to drag the US to dispute settlement if US stops extending GSP to India on the grounds that India is creating market access barriers to the US.

Though GSP is a voluntary measure by the US and other developed countries, they need to be guided by firm WTO principles, Das said. In 2003, India won a case against the European Commission as the latter denied India GSP on textiles and drugs, making such preferences conditional to countries combating drug production and trafficking or protection of labour rights and environment.

However, Ajay Sahai, director general and CEO of the Federation of Indian Export Organizations, said India should not be too jittery about the announcement of a GSP review. “It seems to be a posturing from the US, signalling India that it should not join China in its disputes against the US on steel and aluminium as it wants to bargain hard with China.”

“I don’t think the US is reviewing its GSP policy. If on objective and transparent criteria, India graduates on some products, that is still fine. In every GSP review, we lose out on some products, as India becomes competitive and gains greater market share,” he added.

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"India Would Remain Fastest-Growing Country Across Asia" Says ADB

India's economic growth will rise to 7.3 per cent this fiscal and further to 7.6 per cent in the next financial year, retaining the fastest-growing Asian economy tag, on back of GST and banking reforms. 

In its Asian Development Outlook (ADO), 2018, Manila-based ADB said, "risks to trade are high" and retaliatory actions could dent growth in the Asian region going forward. 

Indian economy grew 6.6 per cent in the last fiscal as it battled the lingering effects of demonetisation in 2016, businesses adjusting to goods and services tax (GST) in 2017, and a subdued agriculture. The country's economic growth was 7.1 per cent in 2016-17. 

With 7.3 per cent growth projected for this fiscal, India would be reversing the two-year declining trend. 

"Despite the short-term costs, the benefits of reform such as the recently implemented GST will propel India's future growth," ADB Chief Economist Yasuyuki Sawada said. 

Robust foreign direct investment flows attracted by liberalised regulations and the government steps to improve the ease of doing business will further bolster growth, Sawada said. 

The ADO said protectionist trade measures by the United States are yet to impact trade flows to and from Asia. 
"However, further action and retaliation against it (US trade tariffs) could undermine the business and consumer optimism that underlies the regional outlook (for Asia)," it said. 

With regard to China, it said the country will slow down from 6.9 per cent in 2017 to 6.6 per cent this year, and 6.4 per cent in 2019. 

"India would remain the fastest-growing country across Asia," ADB India Country Director Kenichi Yokoyama said. However, there are issues regarding rising NPAs and risks from crude oil prices rising above USD 70 a barrel, he said. 

He, further, said the impact of the US tariff hikes may not be much, but India "need to be cautious". 
"The biggest risk factor could be the crude oil price," Yokoyama said. 

ADB's growth projection of 7.3 per cent this fiscal is in line with that of rating agency Fitch, but a tad lower than RBI's forecast of 7.4 per cent. 

The ADO projected developing Asia to grow 6 per cent in 2018 and 5.9 per cent in 2019. 

It, however, said the risks for Asian region are mostly on the downside. 

"The big risk, of course, would be worsening trade friction. Another would be rapid capital outflows that could materialise if the US Federal Reserve needed to raise interest rates faster than markets expect. 

"Finally, the continued build up of private debt for some regional economies since the global financial crisis could undercut growth. Developing Asia is well positioned to respond to these shocks," it added. 

India's growth is expected to pick up further to 7.6 per cent in 2019-20 as efforts to strengthen the banking system and continued corporate deleveraging are likely to bolster private investment, the ADO said. 

ADB India Senior Economics Officer Abhijit Sen Gupta said "further reform to strengthen bank governance is needed". 

ADB projects global crude oil prices to remain around USD 65 a barrel in 2018 and USD 62 a barrel in 2019. 

Also, set to catalyse growth, are benefits from the GST as it mitigates geographic fragmentation and adds revenue to the exchequer, as well as further progress on fiscal consolidation and reform to promote FDI, the ADO said. 

It said the prospects for policy stimulus remain limited and there is risk of tight interest rate regime. 

"The deferment of fiscal consolidation, upside risks to inflation, and expected hikes in US interest rates in 2018 squeeze maneuvering room for policy rate cuts to stimulate growth. At the same time, the odds of a rate hike are low with the central bank indicating tolerance for slightly higher inflation and recognition of the need to nurture recovery. Consequently, the status quo is likely to hold in FY2018, albeit with some risk of monetary tightening," the ADO said. 

It projected inflation to average 4.6 per cent in FY2018 (2018-19), rising to 5.0 per cent in FY2019 with further firming of global commodity prices and strengthening of domestic demand. 

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